Home > Updates > Taro Pharma: Monster Q4

Taro Pharma: Monster Q4

February 10, 2012 Leave a comment Go to comments

Taro Pharma recently reported Q4 2011 numbers. With each quarter the operations get better and the true earnings potential is getting clear. The company reported EPS of $1.4. Based on an annualized rate, that is $5.6. Sun Pharma made an offer to acquire the company at $24.50 per share, a 4.4x P/E. Companies in this industry typically trade in the high teens range. The current market share is $34.85 per share. That is still cheap, a 6.2 P/E. With a public offer of $24.50 while the stock trading at almost $35, it is a clear indication from the market that the buyout is unlikely to happen at $24.50 offer. Infact, if you put a meaningful valuation of 15-18x P/E, you get a valuation in the $84-$100 range.

Even if you take the EPS of $4 for the 2011 year, putting a 15-18x P/E multiple gets you a $60-72 price target.

The company now has net cash of $214M, or $4.8 per share.

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